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on behalf of the appellant, and in dealing with his contention I wish to
say at the outset that I entirely agree with my brother, Young, in think-
ing that the fate of this appeal depends upon the interpretation of the
effect of the hypothecation deed in favour of Nathu Ram dated the 13th
October 1875, on which he obtained the decree of the 27th January 1883,
against the obligor Balkishan alias Baldeo. That decree directed specific
enforcement of the hypothecation by sale of the hypothecated property,
and in execution thereof the property having been attached, the plaintiff'-
appellant's objections founded on his auction purchase of the 4th March
1885, were disallowed by the Court executing the decree on the 27th
September 1885. It was to set aside that order and to obtained release of
the property from attachment that this suit was instituted on the 30fch
October 1886, against the decree-holder Nathu Earn, who is now repre-
sented by the respondents.

[42]The lower Courts have concurred in holding, on the one hand, that
Nathu Ram's hypothecation deed of the 18th October 1875, was a genuine
and bona fide transaction, as also the decree which he obtained on that
deed on the 27th January 1883, and on the other hand, that the plaintiff's
auction purchase of the 4th March 1885 was made by him bona fide for
valuable consideration and without notice of Nathu Ram's hypothecation
deed of the 18th October 1875 and decree of the 27th January 1883.

These findings of fact cannot be questioned in second appeal, and
they furnish the basis of Mr. Strachey's argument on behalf of the appel-
lant. The learned counsel contends that the hyopthecation bond of the
18th October 1875, did not amount to " a simple mortgage," within the
meaning of cl. (b) of 8. 58 of the Transfer of Property Act lIV of 1882) ; that
therefore the decree of the 27th January 1883, cannot be regarded a decree
enforcing sale in pursuance of a mortgage ; that the deed only created a
"charge" such as that contemplated by s. 100 of that Act; that it therefore
did not amount to the transfer of an interest in immovable property, but
only to such an obligation annexed to ownership of immoveable property
as would fall under the purview of the second paragraph of s. 40 of the
Act, and under the last part of that section could not follow the proper-
ty in the bands of a bona fide transferee for value who took without notice
of the charge, such as the plaintiff-appellant in this case.

This contention is supported by citation of many rulings which have
been noticed by my brother, Young, in his judgment ; but I do not think
it necessary for me to consider all of them in detail, as I agree with my
learned brother in thinking that the intention of the parties as expressed
in the deed of the 18th October 1875, amounted to what is known in this

26



YII]



KISHEN LAL V. GANGA RAM



13 All. i*



part of the country as hypothecation or simple mortgage of which a clear
definition is given in cl. (b) of s. 58 of the Transfer of Property Act (IV
of 1882). That definition is only a reproduction of older law and is there-
fore applicable to the deed now in question though it was executed in 1875.
Viewing the deed in this light ib is true that it does not contain any
[43] express words giving the obligee the power of bringing the property
to sale as the means of securing payment of the money advanced, but I
think there is sufficient language in the deed to show that such power is
implied. In the first place the transaction is described as " arh,"
"mustaghraq," which means a hypothecation or simple mortgage, and in
the next place, the deed contains a covenant against alienation till pay-
ment of the loan, and then goes on to say, "if the hypothecated property
(shai mustaghriqa) is destroyed by some unforeseen calamity or proves
insufficient for the bond debt," then the creditor can recover it from the
other property of the executant. This, I think, clearly implies power of
bringing the property to sale, because that is the creditor's remedy for
recovery of money advanced under a transaction of "arh" in this part of
the country, and in this deed the meaning is further made clear by the
use of the word mustaghraq, which implies hypothecation or simple
mortgage.

But against this interpretation Mr. Strachey argues that neither the
word "arh" nor he word " mustaghraq" is the specific term for mortgage
(for which the word is "rehan") ; that they only mean security by hypo-
thecation, which in che absence of a clear indication of a power of sale
amounts only to a charge such as s. 100 of the Transfer of Property Act
contemplates.

In order to deal with this contention it will be convenient to consider
how the matter is dealt with in the Transfer of Property Act, and I cannot
do better than quote a passage from the judgment of Mr. Justice Muttu-
swami Ayyar in Aliba v. Nanu (1) where that learned Judge says : " S. 58
defines a mortgage to be the transfer of an interest in immoveable
property for tbe purpose of securing the payment of money, but cl. (b)
defines a simple mortgage to be one in which there is no delivery of pos-
session of the mortgaged property, but in which the mortgagor binds
himself to pay the debt personally, and agrees expressly, or impliedly, that,
in the event of his failing to pay according to his contract, the mortgagee
shall have a right to cause the mortgaged property to bo sold [44] and the
proceeds of the sale to be applied, so far as may be necessary, in pay-
ment of the mortgage money. In s. 100, a charge is defined to arise
where immoveable property of one person is, by the act of parties or
operation of law, made security for the payment of money to another, and
the transaction does not amount to a mortgage. The distinction then
between a simple mortgage and a charge consists in this, viz., where a
power of sale is ^conferred upon the mortgagee expressly or impliedly by
the instrument of mortgage, the transaction is a mortgage ; otherwise it
only creates a charge."

I concur in this statement of the effect of s. 58, cl. (&), and s. 100 of
the Transfer of Property Act, and I also agree in the distinction pointed
out between a simple mortgage and charge, and in order to make the
distinction clearer I may here adopt the language of Dr. Rashbehary
Ghose in his note on s. 100 of the Transfer of Property Act (2), where the
learned author says : " A charge must be distinguished from a mortgage



1890

JUNE 24.

APPEL-
LATE
CIVIL.

13 A. 28 =

10 A.W.N
(1890) 216.



(1) 9 M. 218 at p. 221.



(2) Tagore Law Lectures, 1875, 6th ed. 2, p. 499.
27



13 All. 45



INDIAN DECISIONS, NEW SERIES



[Vol.



1890 as defined in the Act, more specially from a simple mortgage. In every

JUNE 24. mortgage there must be a transfer of an interest in specific immoveable

property, while in the case of a mere charge no interest is transferred,

APPEL- nor is it necessary that the property to which it relates should be

LATE specific. A charge differs from a mortgage not only in form, but also in

CIVIL, substance. A plea of purchase for value without notice, for instance,

although it may be perfectly good against a charge, will be wholly

13 A. 28- unavailing against a mortgage."

10 A.W.N. Whilst such is the distinction between a charge and a simple mort-

(1890) 216. gage, Mr. Strachey in support of his contention relies upon a passage in
the judgment of Mr. Justice Muttuswami Ayyar in Aliba v. Nanu (1),
where that learned Judge observed :

" Prior to Act IV of 1882 the obligor had only the rights of an
ordinary debtor under a hypothecation deed. On the one band, he
had no right of redemption, whilst on the other the obligee had no
power of sale as inherent in the contract. If the Courts ordered a
sale, they did so as it was the only mode in which a charge could be
[45] enforced. There is no doubt that Act IV of 1882 affects the Act of
Limitation as to rx.ortgages executed subsequently to July 1882, but, as
already remarked, it does so by creating new rights and liabilities in the
obligor and obligee with reference to those mortgages. In this view it
seems to me that Act IV of 1882 could have no retrospective operation,
and I hold therefore that the claim for the sale of the hypothecated pro-
perty was one to enforce a charge, that it falls under art. 132, and that
the hypothecation on which it is based does not possess the properties
with which mortgages executed subsequent to the 4th July 1882, are
invested by Act IV of 1882."

But there are even stronger observations than these in favour of
Mr. Strachey's contention, made by the same learned Judge in the Full
Bench case of Rangasami v. Muttu Kumarappa (2), where in interpreting
a deed in which the words " hypothecation " and " pledge " were used as
representing the transaction, but no power of sale was expressly given to
the obligee, the learned Judge said :

" The transaction is, I think, clearly not a simple mortgage as defined
in s. 58 of that Act. There is neither the transfer of property mentioned
in that section, nor a special agreement whereby the creditor acquires a
power to sell the hypothecated property on default of payment according
to the contract. On the other band, the transaction in suit appears to be
of the kind described in s. 100, which defines bow a charge is created. It
was argued that the Courts used to sell the hypothecated property at the
instance of the creditor, and that a power to sell on default might be
taken to be inherent in every contract of hypothecation made prior to 1882 ;
but it must be remembered that the power contemplated by the Transfer
of Property Act, s. 58, cl. (6), is a power to sell otherwise than through the
intervention of a Court of justice, and that if the Court directs a sale in
the case of a hypothecation bond, it is for the reason that it is the only
mode in which the amount charged on immoveable property can be
realized." And later on in the same judgment (at page 516) the learned
Judge went the length of saying : " It seems to me that the Transfer of
Property Act [46] does not invest all prior hypothecations with the rights
and liabilities arising from simple mortgages, whether or not those transac-
tions satisfy the requirements of the definitions it contains of simple



(1) 9 M. 218 at p. 222.



(2) 10 M. 509 at p. 515,



28



11]



KISHEN LAL 1). GANGA BAM



13 All. *7



mortgages." Again Mr. Strachev relies upon a ruling of the Bombay High
Court in Ehemji Bhagvandas Gujar v. Rama (1) where Birdwood and
Jardine, JJ., said :

" And exhibit No. 3, with which we are more immediately concerned,
simply recites that the land stands security for the money under it. The
property is also spoken of as mortgaged ; but the word must be construed
as meaning only that the land has been made security for the payment of
the money, so that the creditor has a charge upon the property within the
sense of s. 100 of the Transfer of Property Act (IV of 1882). He has the
right to have his charge realized by sale under a decree, but he is not a
mortgagee, as no power is given him expressly or by implication to sell the
property out of Court. Until he obtains a decree against the land, no
interest in it is transferred to him such as is transferred by a power of
sale in an ordinary mortgage."

Now there can be no doubt that if these rulings of the Madras
and Bombay High Courts are to be accepted as governing the decision
of this case, the deed of the 18th October 1875 must be regarded as
creating nothing more than a charge which could not prevail against
a bona fide transferee for value without notice, such as the plaintiff-
appellant in this case. But I cannot accept those rulings as applicable
in this case, partly because they seem to be affected by considerations
relating to the nature and incidents of hypothecation peculiar to those
Presidencies, and partly because, I respectfully think, they proceed upon
a misapprehension of the nature of the power of sale as contemplated by
cl. (6) of s. 58 of the Transfer of Property Act. So far as the Madras
cases are concerned, the passages which I have quoted from the judgment
of Mr. Justice Muttuswami Ayyar would go to show that in that
Presidency no such thing as hypothecation carrying with it as a
necessary incident the power of bringing the property to sale ever
[47] existed before the Transfer of Property Act, and that therefore
cl. (b) of s. 58 of that enactment was the introduction of new law. The
same is possibly the case in Bombay, because there, as the passage which I
have quoted from the judgment of Birdwood and Jardine, JJ., would
show, even the use of the word mortgage coupled with the expression
security would not amount to a simple mortgage within the meaning of
cl. (b) of s. 58 of the Transfer of Property Act. Such is not the case in
this part of the country, for here words of hypothecation and simple mort-
gage have always been understood to import the right of the mortgagee
to bring the property to sale for satisfaction of his claim, and no express
words conferring such power are insisted upon as necessary to create such
power. Upon this point the ruling of this Court in Martin v. Pursram (2),
which was followed by a Full Bench of the Calcutta High Court in
Raj Coomar Ram Gopal Narain Singh v. Ram Dutt Chowdhry (3) and
other cases which I shall presently refer to, are clear authorities.

The other reason why I respectfully decline to adopt the Madras and
Bombay rulings above mentioned is that in the passages which have been
relied upon by Mr. Strachey, and which I have quoted, the learned Judges
seem to have held that the power of sale contemplated in cl. (b) of s. 58 of
the Transfer of Property Act must be a power in the mortgagee to bring
the property to sale independently of the Court. Mr. Justice Muttuswami
Ayyar in Rangasivami v. Muttu Kumarappa (4) in answering the conten-
tion that the right of sale was an incident inherent in every hypothecation



1890

JUNE 24.

APPEL-
LATE
CIVIL.

13 A. 28 =
10 A W.N
(1890) 216.



(1) 10 B. 519.

(3) 13 W.R. 82F.B.



(2) N.W.P H.C.R. (1867) 124.
(4) 10 M. 509,



13 All. 48



INDIAN DECISIONS, NEW SERIES



[Yol.



1890 said : " But it must be remembered that the power contemplated by Trans-
JUNB 24. fer of Property Act, s. 58, cl. (6), is a power to sell, otherwise than through

the intervention of a Court of Justice." Similarly Birdwood and Jardine,

APPEL- JJ., in dealing with a similar contention in Khemji Bhagvandas Gujar v.

LATE Rama (1), observed "He has the right to have his charge realized by sale

CIVIL, under a decree, but he is a not a mortgagee, as no power is given him,

expressly or by implication, to sell the property out of Court." Again

18 A. 28= Birdwood, J., in the later [48] case of Motiram v. Vitai (2) pointed out

10 A.W.N. (at p. 100), that this view was in accordance with the dissentient judgment

<1890) 216. of Petheram, C.J., in the Full Bench case of Sheoro.tan Kuar v. Mahipal

Kuar '3), where that learned Cbief Justice (at p. 266) said :

"A reference to s. 100 of the same Act shows that according to the
law of this country, immoveable property may be made the subject of
a security by a transaction which may not be a mortgage, i.e., by a
transaction which does not transfer to the lender any interest in the land
itself. The question then comes to this, Does the bond in question, either
expressly or impliedly, give the lender himself any right to cause the
.property to be sold, or in other words, to sell it himself? as if it does not,
it transfers no interest in the property and is not a mortgage but a
charge."

With due respect to the learned Judges who have thus interpreted
the power of sale as contemplated in cl. (b) of s. 58 of the Transfer of
Property Act to mean a power to sell the property without the interven-
tion of the Court, I am unable to accept their interpretation. The exact
words in the clause are : " the mortgagee shall have a right to cause the
mortgaged property to be sold," and s. 67 clearly shows that such power
is to be exercised by obtaining from the Court " an order that the proper-
ty be sold." The use of the phrase, " to cause " taken with the provi-
sions of s. 67 as to order for sale, clearly shows that in a simple mortgage
the mortgagee's power of sale is not intended to be exorcised independent-
ly of the Court. If any doubt could exist upon the point it is removed by
the express provisions of s. 69, which, in dealing with the matter, lays
down that a power of sale " without the intervention of the Court is valid
in the following cases and in no others," and the cases enumerated in
the section do not include simple mortgages, as denned in cl. (b) of s. 58.
It is therefore clear that in order to constitute a simple mortgage an ex-
press or implied power of sale exercisable through the Court is all that is
required, and that it is none the less a mortgage, if it conveys no power to the
mortgagee to sell the property out of Court, a power whicb, as I have shown,
could [49] not be valid in such mortgages. This view is in accord with the
doubt expressed by Sargent, C.J., in Motiram v. Vitai (2) as to the accu-
racy of the ruling in Khemji Bhagvandas Gujar v. Rama (1) for he obser-
ved : " It is to be remarked that in Girzvar Singh v. Tkakur Narain (4)
the High Court of Calcutta treat the document in that case, which was a
simple mortgage in the same form as exhibit 3, the subject of discussion
in Khemji Bhagvandas v. Rama (1), as a mortgage within the contempla-
tion of the Transfer of Property Act, and it is certainly very difficult to
suppose that the framers of that Act intended to exclude^from their defini-
tion of mortgage a large class of instruments which were not only in every
day use, but regarded and described by the natives of this country as
mortgages, and treated as such by all the Courts of the mufassii."



(I) 10 B. 519 at p. 527.



(2) IS B. 90 at p. 97.
(4) 14 0. 730.

30



(3) 7 A. 258.



YII]



KISHEN LAL V. GANGA BAM



13 All. 51



I now proceed to consider some of the rulings of this Court in which
the question as bo what amounts to a simple mortgage has been discussed.
In the case of Gopal Pandey v. Parsotam Das (1) a Full Bench of this
Court had to consider whether a hypothecation by an occupancy tenant
of his occupancy tenure was a transfer within the meaning of s. 9 of the
N. W. P. Bent Act. The majority of the Court in that case answered
the question in the negative, whilst I answered it in the affirmative. In de-
livering my judgment in that case I went at considerable length into the
question (at pp. 136 39) what constituted hypothecation or simple
mortgage, and to those views I still adhere, and need not repeat them.
Mr. Strachey, however, argues that my opinion in that case is no longer
available to me as the majority of the Court decided the question in the
negative. This at first sight seems to have force, but as a matter of fact
with the exception of Stuart, C. J., who delivered a separate judgment,
the opinion of the majority of the Court does not abrogate the opinion
which I expressed as to the nature and incidents of hypothecation or
simple mortgage, for they only ruled that '' transfer" in s. 9 of the Bent
Act, meant only an out and out transfer. The ruling of the learned Judges
may be quoted here, in sheir own words. They said : " What s. 9 aimed
at was to prevent occu- [50] pancy tenants from wholly divesting them-
selves of their rights of occupancy by out and out transfer to strangers
to the exclusion of co-sharers interested by inheritance in such right."
Beyond this the ruling has never been understood to govern questions of
mortgages, and its effect has been strictly limited to the interpretation of
s. 9 of the Bent Act by this Court itself.

Tbis appears from the Full Bench ruling in Shib Lai v. Ganga
Prasad (2), where a deed such as the one in this case which employed
the word arh with a covenant against alienation was accepted as amount-
ing to a simple mortgage within the meaning of ol. (6), s. 58 of the Trans-
fer of Property Act. Again, in Sheoratan Kuar v. Mahipal Kuar (3) a
deed worded similarly to that in this case was held by the majority
of the Court to be a transfer by simple mortgage within the meaning
of cl. (b), 3. 58 of the Transfer of Property Act, although the deed
did not expressly give power of sale to the mortgagee and the
words " rehan " (mortgage) and " rnvstajhrag " were taken to imply a
power of sale, though of course not a power of sale without the interven-
tion of the Courb. In delivering my judgment in that case I said : "In
some cases, such as those described in s. 69 of the Transfer of Property
Act, the mortgagee may sell the property by private sale ; in other cases
(and this is the rule of simple mortgages in India) his only way of selling
the property is to go to the Courb to obtain an order for sale. I am of
opinion that this distinction between the two forms of mortgage to which
I have referred does not place them under different categories, for my
conceptions of jurisprudence convince me that both must be classed under
the genus of jura in re aliend or estates carved out of the full ownership
of property, the object, namely, security of immoveable property for the
performance of a pecuniary obligation, being in both cases identical." It
seems to me that the question whether the mortgagee's power of sale is
to be exercised out of Court or through the intervention of the Courb is a
matter relating to what may be called the modus operandi as distinguished
from the essence of the mortgage.

[51] There was another point which Mr. Strachey urged in support
of the appeal. He contended that even if the deed of the 18fih October



1890

JUNE 24,

APPEL-
LATE
CIVIL.

13 A. 28

10 A.W.H.
(1890) 216.



(i) 5 A. m.



(2) 6 A. 551.



(3) 7 A. 258.



31



13 All. 52



INDIAN DECISIONS, NEW SERIES



[Yol.



1890

JUNE 24.

APPBL
LATE
CIVIL.

13 A. 28 =

10A.W.M.
(1098) 216.



1875 be taken to amount to a simple mortgage, the faot that the plaintiff
is a bona fide purchaser for value without notice rendered his purchase of
the 4th March 1885, free of the prior incumbrance. For this contention
the learned counsel relied upon a ruling of the Bombay High Court in
Girdhar Ranchoddas v. Hakamchand Revachand (1) where such a rule
seems to have been laid down with reference to the Gnjrati form of
Sankhat mortgage, which is apparently similar to a simple mortgage in
this part of the country. That ruling, however, has been overruled by a
Full Bench of the same Court in Sobhagchand Gulabchand v. Bhichand (2)
and again by another Full Bench of the same Court in Narain Purshotam v.
Daolatram Virchand (3). There is thus no authority for the proposition
that a simple mortgage such as the one in this case is unavailable as
against a bona fide transferee for value without notice.

There is yet another reason why this appeal cannot prevail. The
plaintiff in this case is the purchaser of the rights and interests of Bal-
kisban such as they were at the auction-sale of fche 4th March 1885. The
purchase being in execution of a simple money-decree, the plaintiff could
acquire no higher title than the judgment-debtor possessed. This being
so, it must be remembered that in respect of this very property Nathu
Bam, whom the defendants-respondents represent, had already obtained a
decree on the 27th January 1883, against Balkishan. That decree, as has
already been observed, was passed on the deed of the 18th October 1875,
and is so framed as to order sale of the property in enforcement of a
simple mortgage. It is in all respect a mortgage decree. Now this being
so, the title of Balkisban was necessarily subject to the decree when it
was sold to the p'aintiff on the 4th March 1885, and he is equally bound
by its terms. In UnnopoornaDasseev. Nufur Poddar (4) the Calcutta High
Court held that the purchaser of property at execution sale is the re-
presentative in interest of the judgment-[52] debtor whose right, title and
interest he has purchased. In Rajaha Enayet Hossein v. Girdhari Lai (5)
the Lords of the Privy Council observed :

" There is another point which appears to have been taken by the
learned Judges of the High Court, and which seems to have been founded
on the supposition that there was some distinction to be made in favour
of a person claiming under an execution sale as contradistinguished from
the representatives of any person claiming under an ordinary assignment



Online LibraryChas. A. Stevens & BrosThe Indian decisions (New series) : being a re-print of all the decisions of the Privy Council on appeals from India and of the various high courts and other superior courts in India reported both in the official and non-official reports from 1875 (Volume 7) → online text (page 6 of 155)